Speaker 1Black Rifle Coffee. Do you remember this brand? This was the bold, loud, funny brand that made viral videos and became the fastest growing coffee company in history. They went from a low seven-figure brand to a nine-figure industry leader to then a billion-dollar behemoth. And now they've gone all the way back down to an unprofitable penny stock. What the heck happened? Today, we're going to look at the rise and fall of Black Rifle Coffee, and we're going to look for the lessons that made them great that we can implement into our business. And we're also going to look at the failures, the mistakes that they made once they got big so that we can avoid making the exact same mistakes. Before we go into the details, here's the number I want you to remember. 287,000. That's the number of recurring subscription orders that Black Rifle Coffee had from people who were buying the product on auto ship. That was not all of their customers, by the way. They had even more customers who were buying once in a while or occasionally. But 287,000 people buying the product on auto ship, meaning every month or every other month. That was what their subscription base was in 2021. That number is going to matter. So remember that as we go forward. My framework for building physical product brands that are scalable and sellable comes down to three pillars. It's a product that sells itself, an audience of raving buyers, and a sales channel that compounds. Black Rifle had all three of these. They had a product in a big space with high margins. They had an audience of fans that loved to buy from them. And they had one sales channel. It was Shopify. And they got people on auto ship buying from them every month or every other month. They had all three. This is what made them great. But over time, they very obviously gave up two of those three pillars. That's what we're going to analyze today. And it starts by looking at their audience. Because Black Rifle was not a brand that started with coffee and then started to get customers. It was the opposite. They started with the audience. In 2014, the founders of Black Rifle started making YouTube videos. And they started making funny content that called out to their core raving fan base. I knew they're going to hate it. And that's why America's going to love it. It was really a hobby and a passion of theirs. It wasn't until later that year that they monetized their following with any products at all. In a Black Friday sale, one of the founders said that they were just going to make some coffee and they're going to make it at home and send it to their followers. Their total investment of that was $1,800. And then they had to fulfill 300 pounds of coffee that were ordered by their core raving fans. This was basically a hobby and a passion play. They had no idea what was going on. They had no plans of taking this into a really big company. Instead of choosing what product they were going to sell and then getting customers, they bought the audience first and they served that group of fans. They did it by selling coffee. You might remember how the brand stood out during this time. They made this very viral video called How to Be an American. And they had this ad that went crazy viral of them just shooting a bunch of guns. In 2017, Keurig pulled their advertising from the company. And Keurig tweeted out Black Rifle Coffee as one of the alternatives. They started to get this compounding exposure from all of these different places by being very counter-trend, by being an advocate for their raving group of fans. That's how this company grew. It wasn't by talking about how great the coffee was. That was an afterthought in all of their marketing. This is a company that grew as a result of relentlessly, loudly, boldly, speaking the values that they believed in that matched with their core group of buyers. That took them to eight figures. It took them to nine figures. It took them to over $200 million in revenue. It took them to over 280,000 people on auto ship. That was the focus of the business. When they started to move away from that, that's when things started to get a little bit shaky. And because their business was mostly focused on content and speaking values, the rest of the business was incredibly simple. They made videos for YouTube. They didn't run a bunch of ads. And their checkout process, their sales channel, was just a Shopify subscription. Pay attention to how simple that is. They created content, they had a subscription product, and they were on Shopify. That was basically the business. And over time, they expanded into things like Amazon, and they did some short-form content. But for the most part, their business stayed remarkably simple. As you'll see, over a couple of years, they stopped being so simple. And, that's when their profitability started to stall. And that's when the business started to erode. As a result of keeping things simple, the stats on this company were amazing. In fact, I was able to find the stats from the investor deck that they released in 2021. This is right before they went public. So they were raising capital in order to have an IPO. And these were the numbers that they released. They had 3.7 billion impressions. They had 70% organic traffic, coming from sources that they owned, like their own audience. Their conversion rate was 7%. Whereas on average, e-commerce conversions are like 1-2%. So they had 70% organic traffic and a 7% conversion rate. That is bonkers. That is a marketer's dream. We live for stuff like this. And they were doing it perfectly. They had 287,000 subscribers and a 43% profit margin. That's amazing. This is exactly what you want to see on a fast-growing business. But then they moved away from this in an attempt to grow faster. And that's when things stopped being so rosy. A few months before the IPO, Black Rifle Coffee started to get caught up in some PR challenges. Kyle Rittenhouse was photographed wearing some Black Rifle Coffee merchandise, and the CEO had to make a public statement about that. People had their own opinions about that statement, if it was the right approach or the wrong approach. But here's what matters. During this time, Black Rifle all of a sudden had different people to communicate to besides their raving fans. They're getting ready to go public. They have investors, and they have advisors, and they have retail brokers that are about ready to carry their product. And all of a sudden, they had to make a choice about doubling down on serving their core audience or going more of a neutral PR direction that would water down their message but be more palatable to these stakeholders. This is where the messaging stopped being so bold, and they started to operate more like a corporation and less like a brand. I want to be clear about something, though. Some people will look at this and say, ah, it was those PR nightmares that made Black Rifle Coffee stop being the industry leader. That's not what happened. The numbers suggest otherwise. 2021 and 2022 were some of the fastest growing years in Black Rifle's history. And that was after the PR nightmares. It was another long-term shift that started to move them away from being the industry leader. And that was that their voice, the thing that made them great, started to get watered down. It didn't kill them overnight. In fact, it may have even helped them grow in the short term, but it turned off the passion of the thing that took them to this meteoric rise. We can see this shift actually happened in the financials. In fact, in 2020, they were spending about 15% of their revenue on marketing. And what was their marketing? Their marketing was organic content. Over the next couple of years, they started spending less and less of their revenue into marketing. By 2025, the total percentage of revenue that they spent on marketing went from over 15% to under 10%. And you can see this on their YouTube channels. You can see this in their marketing. They moved away from being edgy and pushing the envelope. They moved away from being edgy and pushing the In fact, they had several publications and news outlets that they shuttered or at least made much smaller. And you can see in their filings that they announced that they are freeing up those marketing resources to reinvest into what they called more profitable channels. Spoiler alert, that meant retail. So they made a conscious choice to quiet the messaging, to move away from edgy content, and to invest those resources into what they called more profitable channels. into making retail work. I'm not here to say that that was a good decision or a bad decision, but I am here to say that that's a completely different business model. And that happens to be when the business started to shift and lose its place as the industry leader. And I think that's because they moved away from their core thesis and they made the business way more complicated. In 2021, Black Rifle Coffee announced that they were going to go public via a SPAC. We are finally ringing the bell and we officially will be a public trade company. Essentially going public gives us the capital and resources to grow the business at an exponential rate. In early 2022, they had their IPO. And unfortunately for Black Rifle, it was a pretty successful IPO. Within a few months, the stock more than doubled. And that would sound like good news, except they did not plan for things to go that well. You see, worked into the compensation packages of some of their executives were some additional If the stock hit $15, then the executives would get a big fat payout in the form of shares. And if it hit $20 a share, they would get even more of a distribution of shares. They thought that this was going to take four or five years. So this would be a normal, healthy payout in the form of additional compensation. But they hit those numbers in 60 days. As a result, you had this big dump of shares and executive compensation, and that was not a good look for the company. The stock price went up, and all of a sudden, you've got lots of new shares that have just shown up in the marketplace. Today, the stock has fallen more than 97%. Those shares are still out there. Some people looked at this and said that there was funny business going on, that they were basically cooking the books so that they could get more executive compensation. That is not my analysis of what happened. My analysis is that There was a crazy IPO boom in 2021 and 2022. And as a result, Black Rifle Coffee did better than expected in terms of share price. It triggered all of these earnouts for their executives, and then investors started looking at the numbers, and it quickly started to unravel. I think that's a more fair understanding of why the stock price started to plummet. Now, coming into this video, I had a theory. And that theory was that after the IPO, the company raised all this money, and they were drunk, with cash. And so, they started building out this big vision that they had of trying to compete with Starbucks. I remember in their investor packages, how they showed that they were going to have dozens of different coffee shops all around the country, and how they were going to be the next great American brand. So, I thought that the story was going to be they raised all this capital, and they used it to overbuild on this vision. That's sort of true, but I was way more off than I expected. In fact, Black Rifle Coffee only, however, maxed out at 18 coffee shops. I thought it was way higher than that. They had targeted more than 70 of them, but they peaked at 18. Instead, where their money got sopped up wasn't in building this big vision. It was on releasing more SKUs and entering more distribution channels. When you've got a simple business, you make content, and you've got free traffic, and you're sending it to a Shopify checkout, your expenses don't have to get that high. But once you start to get that high, you're going to have to get that high. A lot of different products and going into every different retailer that you possibly can, your capital gets sopped up and used in a variety of different places. And let this be a warning to those of you who think that being in retail is this magical moneymaker. It's not. I have gone the retail route. I've been in over a thousand retail stores. It was not the big payday that we expected it to be. It looks great on paper, and it looks great for revenue, and it'll look great for the revenue of the business. But it's not the big payday that we expected it to be. But it was not good for profit. It was not good for brand. Instead, Black Rifle may retail their primary distribution vehicle, meaning that they prioritize retail over everything else. Remember that number that I shared with you at the beginning of this video, 287,000 subscribers? They had almost 300,000 people paying to be on auto ship. But then they moved away from growing their subscriber base and put their money into growing their brand. And that's what Black Rifle did. This creates a problem because you do not own the distribution of retail. Someone goes into retail and they buy it once, and then they may never come back. But if your business is creating content to target a group of raving fans and getting them on auto ship, you have much more control over your own growth. Black Rifle moved from one to prioritize the other, and this is what happened. The subscriber base went from 287,000 in 2021, to 150,000 in 2025, meaning the subscriber base had shrunk by nearly 50%. The on-paper revenues went from $230 million to $390 million, meaning revenue went up. On a spreadsheet, it probably looked awesome. To investors, it probably looked great. But in terms of profit and customer loyalty, the subscriber base fell by nearly 50%. They hit $390 million in 2024, but then they flatlined for the next two years plus. In fact, the CEO talked about this on an earnings call in 2025. He said, quote, Like many subscription-based D2C businesses, we felt the impact of consumers shifting toward retail purchases, especially as our products have become more widely available in stores. Basically what that means is we prioritized retail, and as a result, our subscriber base has gone down. Now let's zoom out because this is the pattern I want you to see. Black Rifle Coffee had a simple business leading up to their IPO in 2021 and 22. And here are all of the major decisions that they made after they went public. They raised outside capital and became a publicly traded company. That means that they had SEC filings and quarterly reports and advisors and all of that stuff. They opened retail stores, meaning they had coffee shops in nine different markets. They started pushing into grocery and a variety of different retail distribution shops. They launched and scaled canned coffee. This right here, an entirely new line of products. They launched an energy drink. They cut their marketing from over 15% of sales to under 10% of sales, and they eliminated a large amount of their organic content that was driving sales. And in the process, they made one more decision. They moved away from a simple Shopify subscription website to a complicated enterprise software that I'm sure some analysts told them was a necessary complication. All of this to say, that these decisions may have grown revenue, but they massively complicated the business. Every single one of these decisions requires more team members, more advisors, more investments. I mean, just look at the decision to move away from Shopify and onto a complicated system that requires months of effort, millions of dollars in technology, a bunch of new people. And I went and checked this week, they're back on Shopify now, which means that they spent millions of dollars making this complicated decision. And now they're back on where they started because it was simpler for them. As entrepreneurs, we love to think that we're not going to make a similar mistake. And yet most of us do it. We have a simple process that got us to where we are. And then we make things way more complicated. Complication kills growth, whereas simplicity tends to scale. So the lesson to take away from here is that you should keep things simple longer than you think is necessary. That's usually what gets people to growth. And once they move away from that, things often tend to stall. Now there's one more thing that happened with Black Rifle Coffee that was kind of the kill shot. And this part was out of their control. In 2025, they got hit with a myriad of price increases. The price of coffee shot up. And then you had tariffs on top of that. Now this is a hard thing to manage for any company, but there's other companies like Keurig that sell billions of dollars worth of coffee and the business didn't fall 97%. But Black Rifle Coffee gave up all of their purchasing power right before this change. What do I mean by that? Well, when you own your audience, when your audience is just absolutely bought into what you're doing, and you've got these people on subscription, you have pricing power. If you have a bond with your customer base and you control the sales channel, you can go to your customers and say, this is what we're dealing with. And our prices have to go up. That happens all the time. And yes, some people get upset. But if you're not upset about it, but it doesn't tend to kill a company. In this case, Black Rifle Coffee gave up all of their purchasing power right before costs went through the roof. So they had not as much ability to control their own pricing and they gave up more than half of their subscribers. So they had no way to adjust their pricing in order to keep up with the market. And as a result, their margins got absolutely crushed. And what does that do? That sends a signal to investors that this company is going under. And this is where the market is going to go. And that's where the market is going to go. The wheel started to fall off the bus. They had leadership changes. They had four different CFOs. You have a bunch of negative press. And as a result, the company basically became a penny stock and it lost its favor with investors as well as with customers. And that's where Black Rifle started to become a turnaround project rather than an industry leading coffee company. So here's what you can take from this case study. Number one, audience is the asset. It is not your product. It is the audience that you serve. If you double down on serving a group of people, you can always be in business. And if you are prioritizing the connection that you have with that audience, they can take you through all kinds of highs and lows. But if you compromise on that, you end up compromising on everything else in the business too. Audience first, then everything else in the business. Number two, simplicity scales and complexity can be your undoing. Black Rifle Coffee had a simple product line. They had a simple audience message and they had a very simple sales strategy. The minute that that started to be abandoned in favor of complexity, that's when their costs went up and their audience stopped favoring them. Keeping things simple is not just something you do for your mental health. It's also really good for business. Number three, retail is a one-time event, not a growth machine. Black Rifle Coffee built their entire business on recurring auto ship customers. This is the game to play. That's what you control. They then capitalized on that by going into retail. But they made retail the focus, and they didn't control that distribution. As a result, their primary business of recurring auto-ship customers greatly eroded by almost 50%. And all of a sudden, they didn't have the pricing power that could take them through the hard times. Now let me close with a hot take that you probably did not expect. Although I have been critical of the business decisions that Black Rifle has made over the last several years, it's actually now on my watch list as an investor. Here's why. I think the worst might be over for Black Rifle Coffee, and based on some of their recent decisions, it looks like they may be going back to basics. And this is starting to be reflected in their numbers. In Q1 and Q2 of this year, they broke into profitability. And they showed growth for the first time in a long time. As a result, I'm watching this company to see if maybe they've learned their lesson, and they could be a profitable, fast-growing industry leader again. But the thing that will tell me if they're going to get back on track is how they communicate with their audience. Do they go back to making edgy, hard-hitting, organic content? Or do they try to look like every other coffee company? That's going to be the tell for me of if this brand could be an industry. A scalable, sellable brand has three pillars. It has a great product in a big market with great margins. Number two, it has an audience of people who love to buy from you. And that gets cultivated over time. And third, you have a sales channel that compounds, which requires focus. Black Rifle Coffee is an example of how to do it right. Because when they kept those three things simple, they built a seven-figure business in a year. An eight-figure business in three years, and a nine-figure business in six years. That's pretty cool. But the minute that they moved away from those three pillars is when the company started to struggle. We can learn a lot from that, too. If you want to see how you can use all three of those pillars to grow a seven- or eight-figure brand that you can scale and sell, go over to capitalism.com slash model. That's a YouTube video that shows the whole playbook, exactly how we build seven- and eight-figure brands. My name is Ryan Daniel Moran. I help entrepreneurs build seven-figure brands and prepare for a life-changing exit. And if you'd like some help, you can see the resources around this video. Thank you for watching, and I'll see you guys in the next one. Take care.
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